UPDATE 1-Mesa Air wins bankruptcy plan OK, to emerge soon

Reuters Staff

2 Min Read

* Regional carrier filed for Chapter 11 in January 2010

* Mesa expects to emerge as private company in February

NEW YORK, Jan 20 (Reuters) - Mesa Air Group Inc MESAQ.PK won court approval on Thursday for its bankruptcy reorganization plan, clearing the way for the regional carrier to emerge from Chapter 11 protection next month.

The approval by U.S. Bankruptcy Judge Martin Glenn came two weeks after Mesa and its Freedom Airlines Unit resolved litigation with Delta Air Lines Inc (DAL.N).

This litigation stemmed from Delta’s 2008 effort to end Freedom’s status as a Delta Connection carrier.

In a statement, Mesa said the reorganization allowed it to end more than 100 unnecessary aircraft leases and financings, eliminating about $700 million of leases and $50 million of debt from its balance sheet.

Glenn, in his order, called the terms of the reorganization “fair, just, and reasonable under the circumstances.”

Mesa expects to emerge from Chapter 11 as a private company and issue new notes, common stock and warrants to creditors.

The company had filed for bankruptcy protection on Jan. 5, 2010, hoping to use the restructuring process to reduce its fleet and make it easier to settle with Delta.

Mesa said it has 76 aircraft and also operates as US Airways Express and United Express under contracts with US Airways Group Inc LCC.N and United Continental Holdings Inc (UAL.N), respectively.

The case is In re: Mesa Air Group Inc et al, U.S. Bankruptcy Court, Southern District of New York, No. 10-10018. (Reporting by Jonathan Stempel in New York; editing by Andre Grenon)